Blogs I Follow

Updated 25th March, 2014

There are significant differences between China and India as producers and as users of IT.

As producers or providers of technology

China is mainly known for hardware, but is gradually moving into software – still at US$5bn export compared to India’s US$55bn export, though the total revenue of US$90bn is comparable to India’s. In fact several Indian IT services companies including Tata Consulting Services have opened up operations in China, both to tap the talent as well as the market. Despite the large number of fresh engineering, science and maths graduates coming out each year, not all are of the requisite standard. For example, Infosys has opened up its own ‘university’ to ensure new recruits are of the right standard. Interestingly, the campus is host to not only Indian recruits but also foreigners from as far away as America and China.

Another exercise sponsored by Infosys is taking c90 low-caste and ‘untouchable’ students in Bangalore and training them in around six months to attain standards normally only achieved by the famous IIT graduates. Many of these graduates of this programme end up being employed by Infosys as well as its rivals Wipro, IBM and HP.

India is mainly known for software & services cUS$90bn pa, but moving into hardware. This is both in terms of indigenous companies and overseas firms. Many of the latter sense that putting all their ‘eggs in one Chinese’ basket may not be strategically sound. India has 12 mobile providers to China’s 3. It is currently (May 2010) in the middle of a 3G auction that is reminiscent of Britain’s in 2000. So far £5billion has been bid and there is no sign that the pace is slowing.

Both have other technology industries; pharma, biotech …

Both turn out huge number of science and engineering graduates; though the numbers need to be taken with a bit of caution, particularly in India where some degrees are less equal than others!

Both are following a technology growth path proven by Japan in 60s & 70s and South Korea in 80s & 90s:

China has more users of PCs and the Internet, especially amongst the urban middle class and students. It is targeted by companies like Apple who plan to expand from 1 to 25 more stores within next two years.

India has been slower in exploiting IT due to a larger rural poor population who have limited telecoms access; and also joint families which sometimes mean one PC or port per household. But the government has many ambitious plans to make great strides. In March 2010, India embarked on a scheme to provide its 630,000 villages with broadband internet access. The plan is to use the internet to provide education and health services and to bridge the gap between regions and castes. 2012 is the deadline to reach every village with a population above 300. When completed, 300 rural citizens will have access via their villages. The scheme is funded by the state-run Universal Service Obligation fund (worth about $3.5billion) into which private operators have to pay 5% of gross earnings.

Even without the new schemes, Indian farmers sell their produce through a shared intranet service provided by ITC, major agri-business firm ($3bn), cutting out the middle-man. The service also provides services to the farmers such as weather forecasts, advice on fertilisers and pesticides and so forth. Bureaucracy is slowly being beaten by publicly accessible Internet offices (telecentres) run by graduates for free, with all government forms are posted on the Internet. When fully operational, it will replace a bureaucracy established by the East India Company and refined by the Indian ‘babu’ (clerk) over 200 years!

Mobile phones are used by an increasing number of Indians both rich and poor. India’s 850 million subscribers (mid-2011) are second only to China’s of around 1 billion. Street letter-writers are being replaced by mobile phones where illiterate city migrant workers can talk to their rural relatives directly rather than by dictating letters. Reuters has a serviceReuters Market Lite for farmers in several Indian states via SMS to mobile phones. For poorer villagers who do not own mobile phones, each village will have several for single-call rental at a reasonable price. Nearly 60% of Indian Internet users access the wqeb via their mobiles and not PCs. NOTE: there are similar mobile applications in China, but PC access is much higher.

The future of telecoms in India and China is mobile. China Mobile, China Unicom and Bharti Airtel are the top 3 mobile service providers in the world and are all still growing. Bharti Airtel is unique in that apart from sales and marketing, everything else is outsourced. Its network (base stations, microwave links, etc.) is maintained by Ericsson and Nokia Siemens Network, business support by IBM and transmission towers by another company. Ericsson agreed for the first time, to be paid by the minute for installation and maintenance of their equipment rather than being paid up front. This enables the company to provide pan-India phone call rates of Rs. 1/minute (US$0.02/minute).